On July 29th, the Federal Open Market Committee (FOMC) released its latest monetary policy meeting minutes, showing a 9-to-3 vote to keep the federal funds rate target range unchanged at 3.5% to 3.75%.
This marks the fifth consecutive time this year the FOMC has held rates steady, in line with broad market expectations. The Committee will continue its policy of maintaining ample reserves in the banking system.
The main body of the rate decision statement is just 115 words — the shortest in nearly two decades.
Fed Chair Warsh said that, consistent with previous practice, the policy statement only states objective facts and makes no projections. In the current highly uncertain environment, the Fed believes this approach is especially prudent, but uncertainty does not mean the policy direction is unclear.
Following the June policy meeting, Warsh had already pointed out that current inflation data relies on outdated survey methodologies. He indicated plans to push for statistical system reforms to improve data accuracy, said there would be no pre-commitment to future policy actions, and revealed that a comprehensive review of communication methods would be conducted by year-end — with the dot plot possibly being scrapped entirely.
At the latest press conference, Warsh reiterated the Fed’s determination to control inflation while cautioning that taming price pressures cannot be achieved overnight.
The meeting minutes show that economic activity continues to grow at a solid pace, despite elevated uncertainty stemming from factors such as Middle East conflicts. Inflation remains above the Committee’s 2% target, partly reflecting supply shocks that have driven up prices in specific sectors like energy. The statement language shifted from “reaffirm” to “continue to implement,” with the rest of the wording largely unchanged from June.
Meanwhile, as Warsh attempts to clarify the Fed Board’s decision-making logic to the markets, the number of internal dissenting votes has grown significantly.
Three regional Fed presidents voted against the decision, advocating for a 25-basis-point rate hike. This is the first time since 2016 that the Fed has seen three aligned dissenting votes at a single policy meeting.
In the previous projection round, 9 of the 18 participants who submitted forecasts expected at least one rate hike this year. Since then, several officials have signaled willingness to consider further tightening if inflation progress stalls.
Following the meeting, all three major U.S. stock indexes took a sharp downturn. By the close, the S&P 500 fell 1.52%, the Nasdaq Composite dropped 1.74%, and the Dow Jones plunged more than 1,100 points, a decline of 2.19%.
President Trump displayed an unusually nonchalant attitude. When asked whether he was disappointed that the Fed kept rates unchanged, he said Warsh is constrained by the politicians on the Committee who want to maintain high rates, but the White House team will overcome the headwinds created by high borrowing costs.
Since taking office again in January 2025, Trump has repeatedly pressured the Fed to cut rates, criticizing former Chair Powell’s actions as always “too late and too wrong.” On the morning of January 30th this year, Trump nominated Warsh to be the next Fed Chair.
On May 22nd, Warsh was sworn in as the new Fed Chair in Washington. In his inaugural address, he said he would lead a “reform-oriented” Fed and emphasized the institution’s duty to fulfill its mandate of controlling inflation and achieving maximum employment with “independence, clear judgment, and firm resolve.”
Markets had widely expected the FOMC to hold policy rates steady. Citigroup’s short-term rate traders, for example, bet that the Fed would keep rates unchanged this week, even though swap markets priced in a greater than one-in-three chance of a 25-basis-point hike.
The basis for that forecast included the possibility that inflation may have peaked, recent cautious signals from Fed officials, limited transmission of Middle East tensions to core inflation, and June meeting minutes showing most participants favored maintaining or eventually lowering rates.
While Warsh has delivered hawkish remarks on multiple public occasions since taking office — emphasizing price stability, Fed independence, and the risk of sticky inflation — institutions like Nomura believe he is in no rush to raise rates, with the earliest window for rate cuts not opening until 2027.
